Masdar says Egypt’s abundance of solar and wind energy will “enable the generation of renewable energy at a very competitive cost – a key factor for green hydrogen production.”
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Masdar of the UAE and Hassan Allam Utilities of Egypt have signed agreements with state-backed Egyptian organizations through which the parties will work together to develop large-scale green hydrogen projects.
In an announcement Sunday, Masdar — which is owned by Abu Dhabi’s Mubadala state fund — said the two agreements cover facilities destined for the Mediterranean coast and the Suez Canal Economic Zone.
The projects in Egypt aim for an electrolysis capacity of 4 gigawatts by 2030, with a production of no less than 480,000 tons of green hydrogen per year.
Described by the International Energy Agency as a “versatile energy carrier”, hydrogen has a wide range of applications and can be deployed in sectors such as industry and transport.
It can be produced in different ways. One method involves the use of electrolysis, in which an electric current splits water into oxygen and hydrogen.
If the electricity used in this process comes from a renewable source such as wind or solar, some call it green or renewable hydrogen.
While there is excitement in some quarters about hydrogen’s potential, the vast majority of its production is currently based on fossil fuels.
“Masdar and Hassan Allam Utilities see Egypt as a hub for green hydrogen production, targeting the bunker market, exporting to Europe and boosting local industry,” Masdar said in a statement.
“Egypt has abundant solar and wind resources that enable renewable energy generation at a very competitive cost – a key factor for green hydrogen production,” it added. “Egypt is also in close proximity to markets where green hydrogen demand is expected to grow the most, providing robust opportunities for export.”
Masdar’s mention of Europe is instructive and illustrates how the hydrogen sector could develop in the coming years as major economies attempt to become decarbonised.
In July 2021, the CEO of the Italian company Snam outlined a vision for the future of hydrogen, saying its “beauty” was that it could be easily stored and transported.
Speaking to CNBC’s “Squawk Box Europe”, Marco Alverà spoke about how current systems would be used to facilitate the delivery of hydrogen produced using renewable sources and biofuels.
“Now if you turn on your heating in Italy, the gas from Russia, all the way from Siberia, flows in pipelines,” he said.
“Tomorrow we will have hydrogen produced in North Africa, in the North Sea, with solar and wind sources,” said Alverà. “And that hydrogen can travel through the existing pipeline.”
For its part, the executive branch of the European Union, the European Commission, has drawn up plans to install 40 GW of renewable hydrogen electrolysis capacity in the EU by 2030.
In addition to this goal, the commission’s plan also foresees an additional 40 GW “near Europe” that “would export to the EU”.
In recent years, numerous companies have expressed their views on the subject of hydrogen.
In a recent interview with CNBC, Michele DellaVigna, leader of Goldman Sachs’ commodity equity business unit for the EMEA region, tried to highlight the important role he believes would play in the future.
“If we want to go to zero, we can’t do it with renewable energy alone,” he said.
“We need something that will take over from natural gas’s current role, specifically to manage seasonality and intermittentness, and that’s hydrogen,” argued DellaVigna, who described hydrogen as “a very potent molecule.”
The key, he said, was to “produce it without CO2 emissions. And that’s why we talk about green, we talk about blue hydrogen.”
Blue hydrogen refers to hydrogen produced from natural gas – a fossil fuel – where the CO2 emissions generated during the process are captured and stored. There is a heated debate about the role that blue hydrogen can play in decarbonising society.
“Whether we do it with electrolysis or with carbon capture, we need to generate hydrogen in a clean way,” said DellaVigna. “And once we get it, I think we’ll have a solution that could one day become at least 15% of global energy markets, meaning it’s going to be more than a billion-dollar-plus-a-year market.”